I’m going to treat this as a hypothetical…and drat, maybe I should have seen this coming as a possibility!

Currently, there are three NOOKS:

The E-Ink wi-fi only NOOK at $149

The E-Ink wi-fi and 3G NOOK at $199

The backlit wi-fi only NOOKColor for $249

One of these things is not like the others: the 3G NOOK is the only one with the cellphone style way to connect to the internet.

Oh, wait…the NOOKColor isn’t like the other two..it’s the only one that’s backlit.

Yow! The wi-fi only isn’t like the other two…it’s the only one that’s under $150!

As you can tell, I was never very good at that game. ;) Actually, I was…but unless two out of the three are completely identical, I could always find ways that each of them was different from the other two.

Anyway, back to this. :)

It does matter that one of them has 3G.

Why?

When we used to describe our Kindle 1s to techies, one thing blew them away…free 3G.

How much do you pay for your cellphone’s dataplan? Yes, yes, I know many of you have 4G, but it’s the same idea.

I just got my first Smartphone, and though it drives me crazy, I’m paying $25 a month. That’s $300 a year! It’s more than the phone cost!

How much do we pay to go to websites on a Kindle or a NOOK with 3G?

Nothing.

How is that possible?

Amazon or Barnes & Noble pays the fees. They charge $50 more to get a device with 3G (remember, we didn’t have a wi-fi choice with the Kindle until the Kindle 3), and then they pretty much eat the costs.

Pretty much…outside the US, you may pay something, and you pay for sending documents to you Kindle via wi-fi, but you can go to Fandango all you want for free. You can check your e-mail for free (laboriously, but free).

The NOOKcolor, which is “a reader’s tablet”, is apparently doing well. No 3G costs there.

It makes sense to keep an entry-level device…with no 3G costs to Barnes & Noble.

If B&N does phase out the 3G and wi-fi model, does that mean they’d phase out 3G?

That’s a tough one to figure.

You see, the original NOOKs didn’t have wi-fi. If you cut off 3G, you force those people to go to “sideloading”, cabled to the computer.

That wouldn’t make people happy.

However, what if they offered a trade-in? A single-time payout might be worth it to B&N…a wi-fi NOOK and $100 gift certificate, maybe? Alternatively, you keep your original 3G NOOK and sideload.

Wi-fi is becoming more common, so more people may be willing to go for that. The FCC wants to get wi-fi all across the US, but that’s not the only thing.

Businesses are providing it. I went to a Fresh Choice with my laptop, and the greeter asked me if I was hungry, or just there for the free wi-fi. Both, actually. ;)

Another thing is that some Smartphones can serve as a wi-fi hotspot. I think that will become increasingly common. That means you could have wi-fi for your NOOK any place your phone is connected to its network.

To be clear, I don’t know that this is happening…but I think it could.

What would that mean for the Kindle? Would Amazon drop the 3G?

I think that’s less likely, but possible.

One of the main differences is that the Kindle is international. Wi-fi may not be as common in other parts of the world.

Also, there is just a much larger base of 3G Kindles than there were of 3G NOOKS, presumably.

The other thing is that 3G is easier to use than wi-fi, and Amazon likes selling “easy”. A lot of people don’t know their home wi-fi network passwords for example…you just turn on the Kinde and 3G works, if available.

Still, it is something to consider.

I think we’ll find out about B&N’s plans for the 3G NOOK shortly.

Now, lest you think this report means Barnes & Noble is in trouble and thinking of dropping the NOOK altogether, I don’t think that’s it.

It gives the NOOK (not the NOOKcolor) three things the Kindle already had:

Syncing your place across devices (like the Kindle’s Whispersync)

My Shelves, so you can organize books…somewhat like the Kindle’s Collections

Password protect your NOOK

However, the password feature on the NOOK has a huge advantage, and one of the most wanted features for the Kindle. You can password protect the purchasing of content. In other words, your kid can read your NOOK, and not be able to buy anything. That’s not exactly full parental controls, but it’s a step in that direction.

If you are a NOOK owner, I’d get the update. You can read about the new features in the new User’s guide, also available on that page.

Oh, but if you have the 3G, they aren’t sending the update over 3G. You can get it by wi-fi or sideload it.

It begins… ;)

What do you think? Will B&N drop 3G? Will they offer it only if you pay for it? Will Amazon follow suit and drop 3G for the Kindle?

First, do you think people are buying more books overall? Well, it certainly looks that way. 2010 through November compared to 2009 through November was up 3.5%. That’s unlikely to have been caused just by prices going up, since digital media (e-books and downloadable audiobooks) have been increasing their market share…and they tend to be less expensive than their physical counterparts.

How much are e-books up? For the year-to-date to year-to-date period, how about up 165.6 percent?! Keeping it in perspective, though, the sales were $46.6 million compared to adult hardbacks at $219.9 million. My guess, though, is that many more e-books are sold from independent publishers (who wouldn’t be part of the AAP) than p-books. That might skew these numbers a bit.

Adult mass market books continue to be in freefall…down 14 percent on the year-to-year. Mass markets were positioned as the cheap, convenient alternative, and e-books have it all over them for that. I think the time will come when the only mass market paperbacks you see for sale new are really, really cheap quality. I think for major works, we may see that segment of publishing largely evaporate.

When the AAP releases their figures for December, I fully expect that e-books will have overtaken mass market paperbacks in dollars.

Does that matter for e-book readers?

Sure. When the mass market paperback is released, we have typically been seeing the e-book price drop. If there is no paperback release, I don’t think we’ll automatically see a price drop. That doesn’t mean I think a book will be released at $9.99 and just stay there forever. When sales wane, we’ll see a decrease in price (if the people setting the prices are smart about it). E-book prices can be much more volatile than p-book prices…since the prices aren’t printed on the book. :)

Since the e-book market is still expanding rapidly, we may not see those prices move down that much. Let’s say interest in a book decreases 25%…but the number of people buying e-books increases 50%. That could mask that interest drop.

It’s interesting stuff. It will still take e-books a while to catch hardbacks in terms of dollars, but they will pass mass market paperbacks soon. We should see mass market paperbacks rise in price. Trade paperbacks aren’t as affected by e-book sales, but I think e-books might catch them in dollars in another two years, maybe shorter.

Hardbacks are safe for a while yet…but they will lose market share to e-books. I would also guess we’ll see hardback prices rise. I’ve been saying we could see fifty dollar list price new popular hardbacks within five years or so. Seem crazy? Some New York Times bestselling hardback novels are already close to thirty dollars. As hardbacks become a luxury item, I think we’ll see more deluxe editions at those higher prices.

What do you think? Is the time of mass market paperbacks coming to an end? When will e-books outsell (in terms of dollars) hardbacks…or will they? Feel free to let me know.

You might think there would be competition amongst the Kindle bloggers, and we do all want to do well, but there’s room for several Kindle blogs. I don’t mind mentioning one of the others when they are doing something particularly interesting.

I run some polls from time to time, but Stephen does a much bigger survey periodically.

Like this:

Independent publishing for the Kindle has been an important part of the success of the device.

While it’s hard to tell exactly which book come through Amazon’s Digital Text Platform, it’s clear that they have sold well. One of the success stories is Karen McQuestion. Her debut novel, A Scattered Life (first published for the Kindle), has been republished as part of the AmazonEncore program…and optioned for a movie.

While that’s certainly a high-profile case, many others have done quite well.

Why has that helped the Kindle device?

Unique content.

The Agency Model has meant no price competition on most well-known books.

You can compete on customer service…but that’s most apparent after someone has already selected your device.

If you are looking at different e-book sites, one of the things that can be apparent is which one has the most books.

Barnes & Noble states that they have more, but they are counting freebies you can get directly for the NOOK…and indirectly for the Kindle, generally. That certainly may convince some people…but in searches or browsing on a site, Amazon easily wins. Click on Fiction in the Kindle store, and you get 257,073 results. Going to All Fiction NOOKbooks at Barnes & Noble gets you 101,734…not even half as many.

Now, there are two important signs that Amazon may be opening up Kindle publishing to things besides books.

First, they’ve rebranded their independent publishing service for the Kindle.

Rebranding costs some money and can create some confusion. You have to redo your website and references…and other people’s items now refer to something that doesn’t exist any more. It may not be terribly expensive, but it’s not something to be done cavalierly.

That may not sound like much of a change, but since it costs Amazon some money and could create some confusion (change is hard), the question is…why?

Let’s look at what they changed in the name.

They added “Kindle”…that obviously makes sense. When they started it, they may not have wanted to tie it completely to the one device. Right from the beginning, Amazon CEO Jeff Bezos has said he wanted to keep the e-book and EBR (E-Book Reader) markets separate. He wanted Kindle books to be able to be read on many devices, which is certainly the case. They can be read (using free apps) on PCs, Macs, iPads, iPhones, iPod touches, Blackberrys, Android devices, Windows 7 phones…and more to come.

Many people were, at best, uncertain that Amazon could successfully market a self-branded piece of hardware. Not everything Amazon had done had worked, and they were going up against Sony, a very established hardware company.

The Kindle brand not being recognized isn’t a worry any more. :)

So, “Kindle” as part of the name makes sense.

They took off “Digital” and replaced it with “Direct”. That may be just a way to make it sound less techie. Another concern with the Kindle was whether it would appeal outside of the geeky gadget crowd. E-books hadn’t been much of a success, and the people who owned EBRs pre-Kindle were going to be more techie than average. They had to be: there wasn’t wireless download directly to the device, so you had to be willing to work with cables and file management.

Changing from “Digital” to “Direct” may appeal more to the less techie…not positive it makes a big statement. I’m not sure what you could do that wasn’t digital for the Kindle.

They also took out the word “Platform”. That may also be part of making it sound less techie, more like traditional publishing.

The big change, to me, is taking out the word “Text”.

What can you publish for the Kindle that isn’t text (words)? Well, right now, you can do images, certainly. Amazon has been trying to get more magazines available for the device (or at least in the Kindle store). That might be part of it.

Active content, like the games? Yes, that’s definitely a piece…but at this point, you can’t just publish a game through the KDP. Amazon has to thoroughly approve a game…they could cause problems with the Kindle if they aren’t done properly.

I think, and I’m just speculating here, that they are going to open it up to other media…audio and maybe video.

Audio is part of my Kindle experience, and I think that’s true for a lot of people. I listen to music and Old Time Radio shows, and I know other people listen to podcasts and audiobooks. When I polled my readers about their non-reading uses of the Kindle, about a third said they had listened to music on it.

Opening up Kindle-branded publishing to audio makes sense.

But video?

Kindles can’t currently show video.

Devices that use the Kindle store can, of course…especially the tablets.

However, I think this may be another hint that Amazon is going to release its own branded tablet…which I have been suggesting could be called the Amazon Current. That’s just my made-up name for it.

Imagine a Kindle tablet, fully capable of playing video…and you can put your two-minute video parody up for it, earning a little bit of money when people buy it. I think that would tend to make the device more unique and more attractive. Something would have to make a Kindle tablet stand out in a crowded field. The Amazon name would already help with mainstream folks who aren’t gadget-heads.

However, unique content could be a big help. It could also attract those publishers.

While the original thought was that the movies resulting from that program would be available through Amazon existing video download services, it could be an effective part of Kindle video distribution to capable devices…which might include the hypothetical Current.

I said that there were two signs.

The other sign is that the Kindle store now has two bestseller list for e-books, and two for All Kindle Content:

Did they separate that out just for the games and other active content? Maybe…those do sell really well.

However, that might (speculating again) be because they are going to put those movies and audio into the Kinde store. Yes, that might be for sell to tablets besides an Amazon one…but I do think an Amazon-branded tablet makes sense.

What do you think? Does the name change have nothing to do with expanding beyond books? Is it just because they may put the games through the KDP? Is it a sign of an upcoming Amazon tablet? Feel free to let me know.

I hadn’t visited it, but it appears tonight it has been hacked. Going to the site just gets you a hacker sign (thanks to Janean Sparks in the Amazon Kindle community for the heads up).

If it’s actually been hacked, I feel bad for them.

Some of you may have used the site, of course. Are you at any risk? Well, I would think the only information about you they could have gotten is your e-mail address…I think that’s the only personal information (besides your name?) you might have put there.

Amazon would have eventually made them change the domain…they have asked people with “Kindle” in the domain name to change it before. This may precipitate that move.

Regardless, it’s always unfortunate when someone’s site is hacked by someone else, just for the point of defacing it.

Okay, pretty much everybody is in trouble…well, not Amazon or Apple. ;)

But governments? California is (or was?) the eighth largest economy in the world. Newly re-elected Governor Jerry Brown has reaffirmed what the previous governor Arnold Schwarzenegger had said: the state is in a financial crisis. It’s an official declaration: it means lawmakers have 45 days to do…something. If they don’t, they get prohibited from doing other things they want to do…like not being allowed to go outside and play before you finish your homework. ;)

What can they do?

Cut costs and/or raise revenue.

Unlike a lot of politicians, Governor Brown is clear that raising taxes is one of the possible ways to do that.

Which taxes?

Income taxes are not a great way to go…they’ve dropped as a source of revenue, partially due to unemployment. California’s unemployment rate in November (seasonally adjusted) was 12.4%. That’s tied with Michigan for second worst (after Nevada’s 14.3%). By contrast, New York, another economic powerhouse, was at 8.3%. California’s historically worst unemployment rate was only two-tenths of a percent higher…and it was also in 2010.

While California has a lot of rich people (5.28% of our people are millionaires…that’s only ranked #9, though. Alaska has a higher percentage, higher median income.) Yes, California has more millionaires…but that’s because we have a lot of people. We have a lot of expenses, too.

So, income tax is not a really good place for us to go to raise money.

Rounding up the usual assets brings us to…sales tax.

People who buy more expensive items pay more sales tax. The well for sales tax doesn’t run dry. Buy a $100,000 TV set, you are going to pay a lot of sales tax.

People of fewer means need to pay sales tax, too, of course. Raising the rate overall isn’t popular. It’s big news: we know sales tax is pretty likely to never go back down, for one thing.

Try to raise the sales tax rate, and the stores (and the economists) will tell you that it’s bad for retail sales.

So, you try and collect sales tax where you haven’t been getting it before, but at the same rate.

Here’s where it gets interesting.

People buy stuff on the internet…an increasing large amount of stuff. Many people see the prices as significantly better on the internet, because they don’t pay sales tax (they still owe it…see below). Especially when there are free shipping deals (such as are common during the crucial holiday period), shoppers may skip the local stores and go online.

States can’t tax sales that happen in other states. That’s because of what’s commonly called the “Commerce Clause” of the United States Constitution (Article 1, Section 8, Clause 3).

While there is a lot of argument over interpretation, it essentially says that the power to tax interstate business belongs to the federal government, not the states.

What can states do?

They can do everything they can to define a sale as having taken place in their states.

Here’s where it is key.

I’m in California. When I buy from Amazon (in Seattle, with the product maybe shipped from Kentucky), the sale is considered to have taken place in California. I owe sales tax on it to the state of California.

However…

California can’t compel Amazon to collect the sales tax on it, unless Amazon has a presence (a “nexus”) in California.

That’s right…I owe it whether or not Amazon collects it.

That’s a commonly misunderstood part of this. The state can tell me that I owe the taxes, but they can’t tell an out-of-state company to collect it.

If the company selling it to me doesn’t collect it, how am I supposed to pay it?

On my annual state taxes…the same time I pay my state income tax.

I do that…I actually go back through my internet purchases for the year, and if sales tax wasn’t collected (it will be if the company is in California), I pay a not inconsiderable lump sum.

That’s not as good a system for California (and other states). Many, probably most, taxpayers simply don’t do it. California doesn’t know what I bought from Amazon last year…Amazon doesn’t have to report it to them.

That’s because Amazon doesn’t have a physical presence in California.

A physical presence could be a building…but it could be a “sales force”.

Enter what are called “Amazon laws”.

That’s a slang term, but it basically refers to states trying to make e-tailers collect sales tax for sales in their states and send it to them. Collecting it, as you can imagine, is expensive.

Here’s one way to define that Amazon is doing business in your state.

I’m an Amazon Associate, as I’ve told you before. I user “referrer links” in these posts. If you buy something from Amazon because you got there through my link (depending on what it is), Amazon pays me. They don’t charge you anything more for it. It’s basically advertising.

What some states have tried is saying that I (and other Associates) are part of the Amazon sales force, just as if I worked for Amazon. If Amazon had employees to sell their products based in California, the state could then compel them to collect that sales tax.

dated January 18 2011, seeks to amend Section 6203 of the Revenue and Taxation Code.

The official Legislative Counsel’s digest includes this:

“This bill would include in the definition of a retailer engaged in business in this state any retailer entering into agreements under which a person in this state, for a commission or other consideration, directly or indirectly refers potential purchasers, whether by an Internet-based link or an Internet Web site, orotherwise, to the retailer, provided the total cumulative sales price from all sales by the retailer to purchasers in this state that are referred pursuant to these agreements is in excess of $10,000 withinthe preceding 12 months, except as specified.”

In other words, Amazon having Associates in California would define them as doing business in California, and they could be compelled to collect sales tax.

This isn’t likely to get signed into law, in my opinion, but let’s say it was.

Would that mean that sales tax would be collected at the time of sale on Kindle book sales to California residents?

That could change, though. Again, I think that’s unlikely: it would mean they could do a sales tax on the rent you pay, for example.

What about taxing Kindles themselves, or accessories, like covers or lights?

Yes, it could mean that. Remember that you already owe that tax…the difference would be whether Amazon has to collect it or not.

California wouldn’t be the first state to do it. Colorado did…and Amazon responded by cutting off the Associates program in Colorado.

That doesn’t seem like a good solution. Many people make hobby-level money by being an associate; some make more. Non-profit organizations with links to Amazon items on their websites? They are often getting those referral fees.

Those Associates in Colorado were hurt by cutting off the program.

Importantly, the state was hurt as well.

Those fees are taxed.

Colorado did not get to force Amazon to collect sales tax on sales to Colorado, if there wasn’t an Associates program there any more. The Associates stopped getting that income. Colorado lost the income taxes from those sales.

Amazon, of course, lost sales. Presumably, they make a profit on those sales…more than the cost of paying the Associates. However, it might not be more than the impact of collecting the sales tax, which has administrative costs and cuts down their competitive advantage.

I don’t think this bill will become law…but if it does, it could be a net loss for California.

What do you think? Feel free to leave a comment to let me know…and you might want to let your legislators know what you think about this bill as well.

As usual, I don’t vouch for these books, and they come from companies that are not (to my knowledge) blocking text-to-speech. As promotional titles, they may not be free for long. Note: these books are free in the USA: prices in other countries may vary.

Pre-order February 15, 2011 (free again). One interesting thing…I had previously pre-ordered it, but it didn’t tell me that on the product page…until I tried to pre-order it. I usually order the freebies, partly so I can tell you when things have been previously free. :)

Why has it been a couple of times? It’s been offered for free more than once. That happens, sometimes.

In this case, it did seem a little odd because it was offered free two weeks apart.

I assume some of you got it for free as well.

This morning, I have this e-mail:

===

Greetings from Amazon.com.

We’re writing about your past Kindle purchase of Deadly Sanctuary by Sylvia Nobel. The version you received contained some errors that have been corrected.

An updated version of Deadly Sanctuary (ASIN:B002HE1K7O) is now available. It’s important to note that when we send you the updated version, you will no longer be able to view any highlights, bookmarks, and notes made in your current version and your furthest reading location will be lost.

If you wish to receive the updated version, please reply to this email with the word “Yes” in the first line of your response. Within 2 hours of receiving the e-mail any device that has the title currently downloaded will be updated automatically if the wireless is on.

We apologize for any inconvenience caused and thank you for your business with Amazon.Sincerely,Customer Service DepartmentAmazon.comhttp://www.amazon.com

===

There are some very interesting things about this.

First, woo-hoo for Amazon Customer Service!

When people ask me about the differences between various EBRs (E-Book Readers), and why I prefer the Kindle, one of the main things is Amazon’s Customer Service. That’s both my experience with them, and their policies.

The Kindle store lets you “return” any Kindle purchase within seven days for a refund. Last time I checked, neither Barnes & Noble nor Sony allowed e-book returns at any time. That’s just one example.

Remember that Customer Service costs the company money. While there are obviously economic motivations to do it (customer retention being among the most obvious), they have to pay to provide it.

In this case, what would I have thought if they hadn’t sent this e-mail? I probably wouldn’t have noticed. The book might have had some problems and if they were too big, I might have alerted Amazon and/or the publisher. It was a free book for me…I wasn’t going to ask for my money back. ;)

You might say that Amazon had a responsibility to fix the book. Amazon does offer that 7-day refund, but they can’t correct the file. Only the publisher can do that. They can tell the publisher to fix it, and Amazon does do that.

So, here’s another question…why don’t they just replace it and not tell me?

This is key…I might not want the new version.

They aren’t just doing something because it’s “good for me” without asking me.

I had a situation some time back where I had bought a book about the Kindle 1. I thought it was great. The book was updated to relate to the Kindle 2…I didn’t want that one (same Amazon Standard Identification Number…ASIN, I believe).

I don’t want it to be changed without asking me

Another good example is Amazon’s Every Word game. It turned out that the game had possibly objectionable words in it.

People were offered the choice to get a new version or not.

Strange as it seems, when you redownload from your archives, you get the version you bought…not the current one in the store. You get to keep what you bought. I have a book in my archives that has been removed from the store by the author. I can downloaded it for devices on my account…you can’t, nyah, nyah! ;)

It seems bizarre that Amazon actually keeps an archive for us…that suggests that they may have millions of copies of the same file in storage. Of course, they might just be able to save versions for each time there was a revision…sort of like a restore point on your computer.

Amazon is really good at cloud storage, though…they even sell it to other people.

I went back to research this particular one a bit. I was curious as to whether the version that came out in January was the corrected one, and whether or not it had the same ASIN.

When I went to my orders at Amazon, I could click on the title in the January order…and it took me to the above referenced ASIN.

The December order? I couldn’t click on the title and go there.

However, the orders didn’t include the ASINs.

Unfortunately, I tend to delete those digital order confirmation e-mails from Amazon, so I couldn’t go back and check those.

If you downloaded Deadly Sanctuary in December and still have your confirmation e-mail, I’d be curious what the ASIN says.

Bottom line: I think it’s great that Amazon offers you an updated version…and gives you the option to say “No thanks, I’ll keep what I have.”

Like this:

As usual, I don’t vouch for these books, and they come from companies that are not (to my knowledge) blocking text-to-speech. As promotional titles, they may not be free for long. Note: these books are free in the USA: prices in other countries may vary.

Like this:

As usual, I don’t vouch for these books, and they come from companies that are not (to my knowledge) blocking text-to-speech. As promotional titles, they may not be free for long. Note: these books are free in the USA: prices in other countries may vary.

Big Girls Don’t Die
In the Heat of the Night #2
By Crystal Jordan
published by Samhain (a fiction publisher with an emphasis on romance and genre works)

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